August 2023
On a consolidated basis, our operating EBITDA grew by 33.4% year- on-year, reaching Rs. 73.5 crore. This reflects a margin of 16.5% on sales.
We have entered into an agreement with the third-party vendor to support our backward integration effort. We anticipate that we will be fully backward integrated from Q4 onwards and reduce our dependence on China. It will substantially reduce post the backward integration and maybe by 5% or 7% further (<20% RM exposure).
Last year we were honored to be invited to bid on RFP (Request for Proposal) by a large global FMCG player.
There are signs of some raw material easing in the current marketplace, but these are very early days and we do not want to extrapolate this for longer term trend. Some raw materials are available at a lower price, but it may not sustain at these levels.

So, in Europe, we are basically looking at quite a small market share as a total market. But within Italy in the smaller market, we have a fairly large double digit market share.
India utilization levels are very low, 45% for Fragrance and Flavours. Except the Ingredient business, everything else we have quite sufficient headroom for growth.
- We expect that our margin profile to remain stable above 16% odd levels
- Growth

I think the free cash flow will reduce the debt in relation to what we are looking at an aggressive growth. So, if I add Rs.100 crore of extra business, I will definitely need Rs. 40-50 crore of working capital for that growth. So, I do not want to give a number of net debt because if we grow aggressively as what is our strategy in tactically in next 2-3 quarters, we will need to continue to keep the working capital cycle until the cycle stabilizes, we will have to keep the debt on our books.
Global Ingredients Business - So, I think if you see last year same quarter, we had a minus 6 EBITDA, this year we have a minus 3 EBITDA. We are very close to breaking even in the second half of this year and once we are fully backward integrated, our position on the global ingredient will be substantially better.
We were looking at exploring our joint venture or any kind of strategic alliance. We were able to close on a sort of a tolling model where we have provided the technology and we are getting the backward integrated product manufactured to our specs on kind of a tolling arrangement with the third party. So, there is no CAPEX from our side or no large CAPEX, there are small storages and things like this which we need to do, but other than that, there is no large CAPEX from our side for the backward integration. It is all done at the vendor’s end.
This business is a 10% EBITDA business, and we should be reaching those levels once they pull backward integration and our volume strategy is in place.
- Our products are tailor made. We have a trade secret, so we are able to pass on any cost increase.